529 withdrawal on December 28, 2023; received by college on 1/3/ 2024

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March 9, 2024
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1099 Q includes 529 withdrawal on 12/28/2023; 1098 - T does not include this amount because check was received by college on 1/3/2024. How do I handle this on return?

Best answer by Hal_Al

Again, thank you. I really appreciate all the help on this. Let me see if I have this right: 50k qualified expenses, reduced by scholarships and grants of 15k and further reduced by 4k used on parents return for AOC, leaving 31K to use against 1099-Q's. 1099 Q's total 30k, so no 1099-Q income to be included on student's return.

Q. Let me see if I have this right: 50k qualified expenses, reduced by scholarships and grants of 15k and further reduced by 4k used on parents return for AOC, leaving 31K to use against 1099-Q's. 1099 Q's total 30k, so no 1099-Q income to be included on student's return?

A. Yes. The 1099-Qs do not need to be entered.

AmyC

Employee

You may not need to enter the form at all. The 1099-Q was used to pay for expenses within the first 3 months of the next year. IRS Publication 970, Tax Benefits for Education states:

If the entire 1099-Q went to qualified expenses, room and board, tuition, etc then you do not need to enter the form. Tuition paid for the first 3 months of the next year also qualify, see page 12, What Expenses Qualify, and page 52 for qualified distributions.

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David188Author

Thank you. I read what the words say but I am still concerned.

The tax return in question is for my granddaughter who just started college in the fall of 2023. She is the recipient of the two 1099-Q's. One of them ties nicely to the 1098 -T furnished to the IRS by the college; the other 1099-Q is not included in the 1098 - t because the check was received by the college in 2024.

Copies of the 1099 - Q's and the 1098 - T were furnished to the IRS. Those forms are probably automatically matched to the recipient's tax return. Not finding one of the 1099 - Q's reported on the tax return, wouldn't the IRS send a tax deficiency notice?

KrisD15

You can use the link under box 1 on the 1098-T screen "What if this is not what I paid" and adjust the amount to include what you paid in December but did not post until January.

BE SURE TO ADJUST DOWN box 1 on the 2024 Tax Year 1098-T to balance.

Arrange for payment transfers directly to the school in the future to eliminate crossing calendar years.

The intent for the tax-free distributions is to be used for education purposes.

School years and tax years often cross, so an adjustment may be made, however keep student school statements with the tax files and make sure the 2023 adjustment is offset with a 2024 adjustment.

Form 1099-Q and 1098-T are not an easy end-of year match, you need to make allocations outside of the 1040.

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